Total housing starts posted strong gains in January, up almost 10% to a 1.33 million seasonally adjusted annual rate. Single-family construction recorded a nearly 4% rise in January, with the three-month moving average near a post-recession high. The increases in construction activity mirror solid levels for the NAHB/Wells Fargo Housing Market Index, which registered a level of 72 in February — near a two-decade high. The volatile multifamily data was up 24% in January.

Contracts for sales of newly built single-family homes disappointed in January, declining by almost 8%. However, these numbers were at odds with other reports, including ongoing housing price growth and individual builder reports of sales. But the drop matched pending sales of existing homes, which dropped 4.7 in January. Though the January new home sales data will likely be revised up, current inventory of new, ready-to-occupy homes available for sale remains tight.

The median size of new homes continues to decline as the market broadens to include more entry-level homes. The townhouse market grew 7% in 2017, while at the upper end, custom homes saw a more modest growth rate of 2%. The home building and remodeling sectors should continue to expand overall in 2018, fueled by healthy labor conditions and wage gains. The improving economy and increases in income will largely help to offset the hindrance of higher interest rates on housing demand.

Twenty states saw growth above 9.6%, but five states recorded a decline.

]]>

February 28, 2018

January Starts, Sales Tell Different Stories

Total housing starts posted strong gains in January, up almost 10% to a 1.33 million seasonally adjusted annual rate. Single-family construction recorded a nearly 4% rise in January, with the three-month moving average near a post-recession high. The increases in construction activity mirror solid levels for the NAHB/Wells Fargo Housing Market Index, which registered a level of 72 in February — near a two-decade high. The volatile multifamily data was up 24% in January.

Contracts for sales of newly built single-family homes disappointed in January, declining by almost 8%. However, these numbers were at odds with other reports, including ongoing housing price growth and individual builder reports of sales. But the drop matched pending sales of existing homes, which dropped 4.7 in January. Though the January new home sales data will likely be revised up, current inventory of new, ready-to-occupy homes available for sale remains tight.

The median size of new homes continues to decline as the market broadens to include more entry-level homes. The townhouse market grew 7% in 2017, while at the upper end, custom homes saw a more modest growth rate of 2%. The home building and remodeling sectors should continue to expand overall in 2018, fueled by healthy labor conditions and wage gains. The improving economy and increases in income will largely help to offset the hindrance of higher interest rates on housing demand.

Last week's labor market report, ostensibly showing positive news in the form of 2.9% year-over-year gains for earnings, increased volatility for stock prices as investors reassessed their outlook for market risk and interest rates. Wage gains are good news for rental and for-sale housing demand, but income growth without improvements for worker productivity can be inflationary.

While inflation remains tame, it is showing signs of an increase. For example, the three-month moving average annual change of core CPI is now at 2.9%, the highest since August 2011. As a result, interest rates have increased significantly over the last month, with the 10-year Treasury bond near 2.9%. Higher rates for the 10-year Treasury will push up mortgage rates, with the 30-year fixed-rate mortgage now averaging above 4.3%.

Rising rates increase the cost of buying a home with a mortgage. However, higher incomes are particularly helpful for home buyers saving for a downpayment and help counter the negative effect of higher mortgage rates on housing affordability. This environment can yield overall positive outcomes for housing, provided the wage gains are accompanied by improvement for productivity in the post-tax reform economy.

Measures to finance the tax cuts could continue to push up long-term rates.

]]>

February 14, 2018

Rising Rates, Higher Wages: A Counterbalance on Affordability

Last week's labor market report, ostensibly showing positive news in the form of 2.9% year-over-year gains for earnings, increased volatility for stock prices as investors reassessed their outlook for market risk and interest rates. Wage gains are good news for rental and for-sale housing demand, but income growth without improvements for worker productivity can be inflationary.

While inflation remains tame, it is showing signs of an increase. For example, the three-month moving average annual change of core CPI is now at 2.9%, the highest since August 2011. As a result, interest rates have increased significantly over the last month, with the 10-year Treasury bond near 2.9%. Higher rates for the 10-year Treasury will push up mortgage rates, with the 30-year fixed-rate mortgage now averaging above 4.3%.

Rising rates increase the cost of buying a home with a mortgage. However, higher incomes are particularly helpful for home buyers saving for a downpayment and help counter the negative effect of higher mortgage rates on housing affordability. This environment can yield overall positive outcomes for housing, provided the wage gains are accompanied by improvement for productivity in the post-tax reform economy.

While housing starts dipped slightly in December, the 2017 totals for single-family construction were positive — nearly 9% above the 2016 totals. Multifamily starts, however, were down almost 10% as that market finds a balance between supply and demand. NAHB expects single-family starts to increase nearly 5% in 2018, while multifamily starts will decline slightly.

A recent NAHB survey of builders identified the top concerns for the industry. Building material prices and labor costs/availability were cited by 84% of builders as significant problems they expect to face in 2018. The next most commonly cited challenge was the cost/availability of lots, referenced by 62% of builders. Despite these obstacles, the industry continues to expand, adding 86,400 jobs over the last year as housing demand continues to rise.

While housing starts dipped slightly in December, the 2017 totals for single-family construction were positive — nearly 9% above the 2016 totals. Multifamily starts, however, were down almost 10% as that market finds a balance between supply and demand. NAHB expects single-family starts to increase nearly 5% in 2018, while multifamily starts will decline slightly.

A recent NAHB survey of builders identified the top concerns for the industry. Building material prices and labor costs/availability were cited by 84% of builders as significant problems they expect to face in 2018. The next most commonly cited challenge was the cost/availability of lots, referenced by 62% of builders. Despite these obstacles, the industry continues to expand, adding 86,400 jobs over the last year as housing demand continues to rise.

Builders Start the New Year Filled with Optimism
Confidence among builders at the end of 2017 reached its highest measure in more than 18 years. Much of that optimism is due to tight existing home inventory, a solid economy with low unemployment, and an improving policy environment that offers hope for reduced regulatory burdens.

Census estimates of home construction also helped fuel the rise in builder confidence. By November, single-family starts were up 9% on a year-to-date basis, and sales of new single-family homes had increased 17.5% from the month prior — reaching the fastest sales pace in more than 10 years. Growth for residential construction is expected to continue, as a growing share of new homes are being sold from the "not under construction" class.

However, supply-side headwinds will continue to hamper housing in 2018, as will the tight labor market and rising prices for materials. The Federal Reserve will continue to increase interest rates, which will slowly reduce housing affordability, though that impact will be offset by increases in after-tax income. Some markets — particularly high-tax/high-cost markets in coastal areas — will experience some negative effects due to tax law changes. But from a national perspective, single-family construction will continue to expand.

Builders Start the New Year Filled with Optimism
Confidence among builders at the end of 2017 reached its highest measure in more than 18 years. Much of that optimism is due to tight existing home inventory, a solid economy with low unemployment, and an improving policy environment that offers hope for reduced regulatory burdens.

Census estimates of home construction also helped fuel the rise in builder confidence. By November, single-family starts were up 9% on a year-to-date basis, and sales of new single-family homes had increased 17.5% from the month prior — reaching the fastest sales pace in more than 10 years. Growth for residential construction is expected to continue, as a growing share of new homes are being sold from the "not under construction" class.

However, supply-side headwinds will continue to hamper housing in 2018, as will the tight labor market and rising prices for materials. The Federal Reserve will continue to increase interest rates, which will slowly reduce housing affordability, though that impact will be offset by increases in after-tax income. Some markets — particularly high-tax/high-cost markets in coastal areas — will experience some negative effects due to tax law changes. But from a national perspective, single-family construction will continue to expand.

After a mild 2016, economic growth gained momentum in 2017. New jobs continue to be produced and unemployment (4.1%) is low. While this is positive news for housing demand, the unceasingly tight labor market conditions mean increased competition among employers for a smaller number of available workers. This is one of the reasons the construction industry continues to see an elevated number of open jobs: 227,000 in October, near a post-recession high. It also implies additional wage growth in the year ahead.

Builders can also expect continued growth in the cost of building materials. Since the beginning of the year, OSB prices have jumped 30%, softwood lumber prices are up almost 15% and gypsum prices have increased almost 8%. Additional building material supply is needed as the home building sector grows. However, duties imposed on Canadian softwood lumber of almost 21% accomplish the opposite of what the industry and home buyers need. NAHB estimates that the tariff on lumber imports alone is responsible for a nearly 7% price increase and has already driven up the price of a new home by an average of $1,360.

After a mild 2016, economic growth gained momentum in 2017. New jobs continue to be produced and unemployment (4.1%) is low. While this is positive news for housing demand, the unceasingly tight labor market conditions mean increased competition among employers for a smaller number of available workers. This is one of the reasons the construction industry continues to see an elevated number of open jobs: 227,000 in October, near a post-recession high. It also implies additional wage growth in the year ahead.

Builders can also expect continued growth in the cost of building materials. Since the beginning of the year, OSB prices have jumped 30%, softwood lumber prices are up almost 15% and gypsum prices have increased almost 8%. Additional building material supply is needed as the home building sector grows. However, duties imposed on Canadian softwood lumber of almost 21% accomplish the opposite of what the industry and home buyers need. NAHB estimates that the tariff on lumber imports alone is responsible for a nearly 7% price increase and has already driven up the price of a new home by an average of $1,360.

At this sales pace, there is only a 4.9 months' supply of new homes available. Moreover, a rising share of new home sales is coming from homes that have not yet begun construction, pointing to additional gains for construction in the near term.

At this sales pace, there is only a 4.9 months' supply of new homes available. Moreover, a rising share of new home sales is coming from homes that have not yet begun construction, pointing to additional gains for construction in the near term.

Tax reform is the big debate in Washington, and the stakes are high. Certain components of the proposals would sideline and limit the mortgage interest and real estate tax deductions — two major factors in determining the costs and incentives of homeownership. Other elements of the proposals would provide reductions in small business and corporate tax rates and, due to NAHB advocacy efforts, protect the business interest deduction for real estate development firms.

Side-by-side, the Senate plan is much better for housing. It offers more generally favorable treatment for S Corps and LLCs due its rate schedule and more usable 17.4% pass-through business income deduction, while also protecting important affordable housing policies like the LIHTC and the tax-exempt bond program.

Tax reform is the big debate in Washington, and the stakes are high. Certain components of the proposals would sideline and limit the mortgage interest and real estate tax deductions — two major factors in determining the costs and incentives of homeownership. Other elements of the proposals would provide reductions in small business and corporate tax rates and, due to NAHB advocacy efforts, protect the business interest deduction for real estate development firms.

Side-by-side, the Senate plan is much better for housing. It offers more generally favorable treatment for S Corps and LLCs due its rate schedule and more usable 17.4% pass-through business income deduction, while also protecting important affordable housing policies like the LIHTC and the tax-exempt bond program.

After a slow start to the year, economic growth accelerated in the spring. According to the Bureau of Economic Analysis, GDP growth stepped up to a 2.6% annual rate in the second quarter, a significant improvement over the 1.2% rate registered for the first three months of 2017. NAHB forecasts the economy's modest growth will continue over the near term.

The homeownership rate is finally showing signs of stabilizing after years of decline. Census Bureau data for the second quarter showed a homeownership rate of 63.7%, after reaching a cycle low of 62.9% during the second quarter of 2016. Moreover, the Census data also showed that for two consecutive quarters, the U.S. housing market has added more home owners than renters.

Demand for owner-occupied housing will depend on the future of the labor market, which continues to be tight. Over the last two months, the economy has added an estimated 440,000 jobs. The residential construction labor force continues to expand, but at a slow pace. In the last 12 months, home builders and remodelers added 188,300 jobs. However, the count of open, unfilled construction sector jobs increased in June to 225,000 — the highest count since September 2016.

June was the third consecutive month of decreases after a strong start to the year.

]]>Economic Growth Picks Up the Pace

After a slow start to the year, economic growth accelerated in the spring. According to the Bureau of Economic Analysis, GDP growth stepped up to a 2.6% annual rate in the second quarter, a significant improvement over the 1.2% rate registered for the first three months of 2017. NAHB forecasts the economy's modest growth will continue over the near term.

The homeownership rate is finally showing signs of stabilizing after years of decline. Census Bureau data for the second quarter showed a homeownership rate of 63.7%, after reaching a cycle low of 62.9% during the second quarter of 2016. Moreover, the Census data also showed that for two consecutive quarters, the U.S. housing market has added more home owners than renters.

Demand for owner-occupied housing will depend on the future of the labor market, which continues to be tight. Over the last two months, the economy has added an estimated 440,000 jobs. The residential construction labor force continues to expand, but at a slow pace. In the last 12 months, home builders and remodelers added 188,300 jobs. However, the count of open, unfilled construction sector jobs increased in June to 225,000 — the highest count since September 2016.

Despite growing supply-side concerns, housing demand continues to be sustained by healthy job creation and optimistic consumers. The Bureau of Labor Statistics reported that 220,000 jobs were created in June, with the unemployment rate increasing slightly to 4.4%. Moreover, home builders and remodelers added almost 116,000 jobs over the last 12 months.

Ongoing job creation has also helped support consumer optimism. The Consumer Confidence Index was up slightly in June, with one submeasure increasing to nearly 33% of respondents indicating jobs are plentiful. Incomes are also rising, with disposable personal income up 2.2% over the last year.

Economic challenges remain anchored on the supply side of the market, with a new softwood anti-dumping duty — in addition to existing countervailing duties — adding to builder costs. Moreover, the share of single-family home builders reporting shortages of framing lumber has increased to 21%.

NAHB analysis compares expenditures of new home buyers to non-moving home owners.

]]>Job Growth Helps Propel Housing Demand

Despite growing supply-side concerns, housing demand continues to be sustained by healthy job creation and optimistic consumers. The Bureau of Labor Statistics reported that 220,000 jobs were created in June, with the unemployment rate increasing slightly to 4.4%. Moreover, home builders and remodelers added almost 116,000 jobs over the last 12 months.

Ongoing job creation has also helped support consumer optimism. The Consumer Confidence Index was up slightly in June, with one submeasure increasing to nearly 33% of respondents indicating jobs are plentiful. Incomes are also rising, with disposable personal income up 2.2% over the last year.

Economic challenges remain anchored on the supply side of the market, with a new softwood anti-dumping duty — in addition to existing countervailing duties — adding to builder costs. Moreover, the share of single-family home builders reporting shortages of framing lumber has increased to 21%.

Vancouver, Washington, a bedroom community across the Columbia River from Portland, Oregon, has seen its inventory of homes for sale shrink as the housing market picked up after the Great Recession and available homes got snapped up. First-time home buyers and others looking for affordable homes see the area as an alternative to Portland, where rents and home prices have soared in recent years.

The math doesn't exactly make sense, but perhaps the sentiment does. More borrowers applied for home loans last week, even as interest rates made their largest five-day jump since just after the presidential election. Perhaps some thought it might be their last chance at low rates.

The pool of private funds available to build or preserve affordable housing in the United States has shrunk by about $1 billion since November, and President Trump's tax plan is to blame — even though it hasn't been adopted yet.

Despite the lawsuits, media spotlight and conventional wisdom, affordable housing developments built in poor, heavily black communities can lead to greater racial and income integration, according to new research by Stanford economists.

Just before he departed the House last week to become a Fox News contributor, Utah Republican Jason Chaffetz proposed a housing stipend for members of Congress. "I think a $2,500 housing allowance would be appropriate and a real help to have at least a decent quality of life in Washington," he said. "You shouldn't have to be among the wealthiest of Americans to serve properly in Congress."

Federal Reserve Gov. Jerome Powell, who heads the agency's supervisory committee, called on lawmakers Thursday to move more quickly in crafting legislation to reform the government-sponsored enterprises, saying that "we're almost at a now-or-never moment here." (Subscription may be required.)

The battle over the future of housing finance may turn on whether whatever reforms or replaces Fannie Mae and Freddie Mac will bypass small banks, delivering more market share and power to the biggest banks. (Subscription may be required.)

In our 40s, we've accepted the aches and pains that remind us we're no longer 25. That said, the last thing we want to think about is how our health might look in our 60s and 70s, much less what living accommodations we might need to handle our changing physical abilities.

Donald Trump campaigned on restoring the "American dream," a 1931 metaphor for economic success that has become political shorthand for homeownership. But as president, Trump faces a unique challenge delivering on that promise: The country is in the grip of a new kind of housing crisis that Washington has virtually no power to solve.

The U.S. Department of Labor has asked the U.S. Court of Appeals for the Fifth Circuit to confirm that it is permitted to use salary as a factor in determining which workers are eligible for overtime before it begins a new rulemaking process to amend a pending overtime regulation, according to Bloomberg BNA.

I want to warn you from the top, this is a highly speculative post in multiple directions at once. I have a theory as to what is holding back the housing market, and another theory as to why that might be a good thing. There isn't a lot of data to back up either claim, and I wouldn't elevate other above conjecture at this point. But stick with me anyway.

Vancouver, Washington, a bedroom community across the Columbia River from Portland, Oregon, has seen its inventory of homes for sale shrink as the housing market picked up after the Great Recession and available homes got snapped up. First-time home buyers and others looking for affordable homes see the area as an alternative to Portland, where rents and home prices have soared in recent years.

The math doesn't exactly make sense, but perhaps the sentiment does. More borrowers applied for home loans last week, even as interest rates made their largest five-day jump since just after the presidential election. Perhaps some thought it might be their last chance at low rates.

The pool of private funds available to build or preserve affordable housing in the United States has shrunk by about $1 billion since November, and President Trump's tax plan is to blame — even though it hasn't been adopted yet.

Despite the lawsuits, media spotlight and conventional wisdom, affordable housing developments built in poor, heavily black communities can lead to greater racial and income integration, according to new research by Stanford economists.

Just before he departed the House last week to become a Fox News contributor, Utah Republican Jason Chaffetz proposed a housing stipend for members of Congress. "I think a $2,500 housing allowance would be appropriate and a real help to have at least a decent quality of life in Washington," he said. "You shouldn't have to be among the wealthiest of Americans to serve properly in Congress."

Federal Reserve Gov. Jerome Powell, who heads the agency's supervisory committee, called on lawmakers Thursday to move more quickly in crafting legislation to reform the government-sponsored enterprises, saying that "we're almost at a now-or-never moment here." (Subscription may be required.)

The battle over the future of housing finance may turn on whether whatever reforms or replaces Fannie Mae and Freddie Mac will bypass small banks, delivering more market share and power to the biggest banks. (Subscription may be required.)

In our 40s, we've accepted the aches and pains that remind us we're no longer 25. That said, the last thing we want to think about is how our health might look in our 60s and 70s, much less what living accommodations we might need to handle our changing physical abilities.

Donald Trump campaigned on restoring the "American dream," a 1931 metaphor for economic success that has become political shorthand for homeownership. But as president, Trump faces a unique challenge delivering on that promise: The country is in the grip of a new kind of housing crisis that Washington has virtually no power to solve.

The U.S. Department of Labor has asked the U.S. Court of Appeals for the Fifth Circuit to confirm that it is permitted to use salary as a factor in determining which workers are eligible for overtime before it begins a new rulemaking process to amend a pending overtime regulation, according to Bloomberg BNA.

I want to warn you from the top, this is a highly speculative post in multiple directions at once. I have a theory as to what is holding back the housing market, and another theory as to why that might be a good thing. There isn't a lot of data to back up either claim, and I wouldn't elevate other above conjecture at this point. But stick with me anyway.

A tightening labor market and a desire to normalize monetary policy led the Federal Reserve's monetary policy committee to tighten financial conditions.

First, the Federal Open Market Committee announced the second rate hike of 2017, increasing the target rate to a range of 1%-1.25%. NAHB expects one additional increase in 2017.

Second, the committee announced plans to reduce its balance sheet, which grew after the Great Recession as part of an accommodative policy known as quantitative easing. The balance sheet, which includes $1.8 trillion in agency debt and mortgage-backed securities, would be reduced in a "gradual and predictable" manner, creating only a slight increase in mortgage rates. The reductions in mortgage-backed securities would start at $4 billion and rise to $20 billion per month over a 12-month period and not result in a complete run-off of holdings. This process would likely begin at the end of 2017.

The Fed's actions are motivated by admittedly conflicting data. Measures of inflation remain below the Fed's 2% objective, but tight labor market conditions risk accelerating prices. For example, the unemployment rate was 4.3% in May and job openings persist at elevated levels, especially within the construction industry. The Fed's moves represent a belief that economic conditions continue to be solid and growth will continue.

A tightening labor market and a desire to normalize monetary policy led the Federal Reserve's monetary policy committee to tighten financial conditions.

First, the Federal Open Market Committee announced the second rate hike of 2017, increasing the target rate to a range of 1%-1.25%. NAHB expects one additional increase in 2017.

Second, the committee announced plans to reduce its balance sheet, which grew after the Great Recession as part of an accommodative policy known as quantitative easing. The balance sheet, which includes $1.8 trillion in agency debt and mortgage-backed securities, would be reduced in a "gradual and predictable" manner, creating only a slight increase in mortgage rates. The reductions in mortgage-backed securities would start at $4 billion and rise to $20 billion per month over a 12-month period and not result in a complete run-off of holdings. This process would likely begin at the end of 2017.

The Fed's actions are motivated by admittedly conflicting data. Measures of inflation remain below the Fed's 2% objective, but tight labor market conditions risk accelerating prices. For example, the unemployment rate was 4.3% in May and job openings persist at elevated levels, especially within the construction industry. The Fed's moves represent a belief that economic conditions continue to be solid and growth will continue.

A strong month for home sales in March reinforced the trend of positive housing demand. Sales of new single-family homes grew 15.6% from a year prior, and 5.8% above the previous month's mark—a noteworthy gain, considering February's sales benefitted from the unseasonably warm weather.

March was also an encouraging month for the existing homes market, which saw sales rise 4.4% to its highest pace in 10 years. Inventory of existing homes for sale remains very tight, standing at only a 3.8 months' supply. This is a primary reason why the increases of home prices continue to outpace growth in household incomes.

However, supply-side costs remain on the rise as builders continue reporting scarce availability of labor and lots. And the announcement of an effective 20% tariff on Canadian softwood lumber could have a significant, negative impact on construction jobs and wages. One-third of the softwood lumber consumed in the U.S. is imported, about 95% of which comes from Canada.

A strong month for home sales in March reinforced the trend of positive housing demand. Sales of new single-family homes grew 15.6% from a year prior, and 5.8% above the previous month's mark—a noteworthy gain, considering February's sales benefitted from the unseasonably warm weather.

March was also an encouraging month for the existing homes market, which saw sales rise 4.4% to its highest pace in 10 years. Inventory of existing homes for sale remains very tight, standing at only a 3.8 months' supply. This is a primary reason why the increases of home prices continue to outpace growth in household incomes.

However, supply-side costs remain on the rise as builders continue reporting scarce availability of labor and lots. And the announcement of an effective 20% tariff on Canadian softwood lumber could have a significant, negative impact on construction jobs and wages. One-third of the softwood lumber consumed in the U.S. is imported, about 95% of which comes from Canada.

Optimism among single-family builders this month is the strongest it has been since 2005. Much of this positive sentiment stems from the widely anticipated reductions of government regulations. A prime example was the recent executive order to roll back the Waters of the United States rule that affects builders' and developers' wetlands permits. However, we can expect some moderation in builder confidence in the months ahead, as interest rates rise and headwinds persist for access to lots and labor.

As expected, last week the Federal Reserve increased the short-term federal funds rate for just the third time in the post-recession era. Much of the Fed's stance is fueled by a strengthening labor market, which added 235,000 jobs last month. As the rate of inflation approaches the 2% target rate, NAHB forecasts two additional rate hikes this year.

Additional price pressures can be seen on the supply side of the industry. Gypsum prices have increased more than 6% in the first two months of 2017, and softwood lumber prices rose almost 5% due to the ongoing lumber trade dispute between the U.S. and Canada. As housing starts continue to rise in the months and years ahead, additional sources of lumber will be required.

Single-family builders typically use 10 different green products or practices.

]]>Builder Confidence Highest in Nearly 12 Years

Optimism among single-family builders this month is the strongest it has been since 2005. Much of this positive sentiment stems from the widely anticipated reductions of government regulations. A prime example was the recent executive order to roll back the Waters of the United States rule that affects builders' and developers' wetlands permits. However, we can expect some moderation in builder confidence in the months ahead, as interest rates rise and headwinds persist for access to lots and labor.

As expected, last week the Federal Reserve increased the short-term federal funds rate for just the third time in the post-recession era. Much of the Fed's stance is fueled by a strengthening labor market, which added 235,000 jobs last month. As the rate of inflation approaches the 2% target rate, NAHB forecasts two additional rate hikes this year.

Additional price pressures can be seen on the supply side of the industry. Gypsum prices have increased more than 6% in the first two months of 2017, and softwood lumber prices rose almost 5% due to the ongoing lumber trade dispute between the U.S. and Canada. As housing starts continue to rise in the months and years ahead, additional sources of lumber will be required.